They say a week is a long time in politics, but it’s been an even longer time since an international treaty was defeated in parliament; all the way back in 1864. It was a great year for infrastructure if nothing else, with Charing Cross Station and the Clifton Suspension Bridge both opening that year. Interestingly, 1864 also proved an illustrious year for sport, as overarm bowling was legalised in cricket for the first time.
In what could have been a tumultuous time for the Prime Minister this week, Theresa May stood firm in her crease, winning a vote of no confidence, called by Jeremy Corbyn after a crushing defeat for her divorce deal in parliament. On Tuesday, British lawmakers overwhelmingly voted down Mrs May’s agreement, an outcome that was largely priced in by financial markets, although the magnitude, a margin of 230, came as a surprise.
However, the Prime Minister’s historic defeat was seen by many commentators as reducing the chance of a hard Brexit even as uncertainty over a no confidence vote prevailed. Theresa May was able to win the subsequent vote tabled by Jeremy Corbyn the following day, seeing off the vote by winning 325 to 306.
Surprisingly, throughout the ordeal, domestic markets remained remarkably sanguine, with both the FTSE 100 and the more UK focussed FTSE 250 shrugging off much of the uncertainty generated. Sterling did enjoy some modest gains as events in Westminster unfolded, passing $1.29 against the US dollar.
Focussing more on happenings in the Bank of England rather than in Westminster, UK CPI data was released on Wednesday. In line with consensus forecast, the inflation data showed that the price of goods and services grew at 2.1% compared to a year ago, showing a steady decline in price rises over recent months. The data will make for happy reading for Mark Carney and co as they saw inflation drifting down towards their target of 2%, giving them little reason to carry on raising rates in the short term.
In terms of economic data, the week started on a bad note as Chinese export and import data showed that perhaps its ongoing trade war with the US was starting to bite. Expected to grow by 0.6%, export data slowed to 0.2% whilst import numbers proved to be really disappointing, showing a contraction of 3.1% against hopes of a 12% rise.
Global equities rallied on Friday on the back of reports that the US were considering offering an olive branch to China, scaling back tariffs in the hope it would encourage China to agree on longer-term reforms.